Why Insurance Underpays Claims (And What to Do)

John A. Jacobsen (00:00)
Thinking about real estate investors and some of whom I’ve worked with plenty of times before, whether they’re owning commercial or landlords policies. My advice to them is don’t get just the bare minimum policy in

our business, say you’re a landlord over several properties, they’ll go out and they’ll get the most basic policy, I believe it’s called the DP-1. And that policy basically just covers fire. ⁓ It doesn’t cover a lot of other things such as that happen all the time.

Scott Bursey (02:13)
Hi everyone and welcome to the Real Estate Pros Podcast. I’m your host Scott Bursey and today I’m joined by someone I’ve really been looking forward to chatting with, John Jacobsen, who’s been making some very serious moves in the public insurance adjusting and property claims space. Without any further ado, John, the floor is yours.

John A. Jacobsen (02:32)
How are you today, Scott?

Scott Bursey (02:32)
Excellent and thank you for being on the show. I know you have a message to convey to our audience so if you would Fill us in on some of the things that you’ve been up to here recently

John A. Jacobsen (02:46)
Gladly. Scott, I work as a public insurance adjuster. By background, I’m an attorney. So I had gotten a lot of experience in ⁓ reviewing insurance policies, which are not the most exciting things to read in the world, but they also hire people like me to do that. I…

brought that into the field of insurance and claims because I could see, especially working on the inside of insurance companies for many years, that insurance companies were number one, either very much in a hurry to get through the claims, especially after a mass disaster.

and they would often miss major items when they were adjusting the client’s claim. number two, often they were not telling their insureds everything they were entitled to under their policy. When they have to pay, when your insurance company has to pay your homeowners claim, you’re no longer in the…

side by side position, you’re facing one another. It’s a more adversarial position. And motto of my company, which is called Final Analysis, is your insurance company has an adjuster, so should you. I’m here on this podcast, Scott, to tell the audience out there, which I believe is primarily

very sophisticated real estate investors that you too are purchasers of the product of insurance and It’s a product. We’re all forced to have it’s namely a grudge purchase It’s one of those things you’ve got to have it’s nothing you look forward to going out and shopping for But if you’ve got to have it, well, you really better have

a product that is going to suit your needs and get to what you want out of it because you’re paying good money for a promise. Well, that promise better be one that they live up to. And I want to arm people with information as to making sure the insurance company lives up to its promise and then letting them know if they’re not aware.

of people like myself, besides attorneys, someone like myself, a public adjuster who can step in and help them with a property claim, whether they’re a homeowner of a home they’ve lived in for 40 or 50 years or a real estate investor who owns 50 properties. They’re all going to have claims at one point or another.

And I want to be there to arm them with information and where I’m needed, help them through the process and make sure the insurance company lives up to what it’s promising.

Scott Bursey (06:40)
that is really noble. And I think our audience is really going to take something away from your relentless pursuit, John, of your fairness, proving that when homeowners are up against massive insurance entities, having a legal-minded advocate in their corner changes the entire trajectory of their recovery. Do you mind elaborating on that just a little bit?

John A. Jacobsen (07:02)
Yes, I will. I think it’s become more important for policyholders to have help or at the very least, sophistication and understanding of what they’re buying when they buy insurance. It’s alarming that many insurance agents, ⁓ they don’t even know that much about the products that they’re selling. They might know

about as much as is on the deck page or the declarations page, which describes your coverage, but they don’t know a lot of things that are built into the policy that can help insurers and policyholders be able to know that, for instance, there is in most all property insurance policies and appraisal clause that if they don’t like what the insurance company is offering them,

they can challenge it and the insurance company has to find someone who does not work for them in order to see it between who you assigned to be your appraiser, which is usually myself and the insurance company assigned someone who does not work for them. The two of us are usually able to settle it. It’s binding on the insurance company. Most people, I’ve worked for insurance companies for years and

was not even aware of some of the mechanisms that are built into a policy that actually helped the policyholders. And as policyholders have discovered them, they’re starting to be taken away. And we’re starting to see that happening, especially down here in Florida. ⁓ We’re paying more. And that is another thing too, very important for your listeners to know, but they’re aware of this when they pay their bills.

they’re paying more for insurance. In the last five years in my home state of Florida, which is the third largest state in population in the country, but has 70 % of the claims nationally. And you can attribute that to hurricanes, but we’ve seen a 72 % increase in insurance premiums. It’s starting to slow down a little and the insurance companies are calling this

best, but people are becoming insurance poor. Well, know something, if you have to have this product, which we do, if you have to have this product, you really better know it and be able to navigate through a claim in order to win because the odds are stacked against you.

Scott Bursey (09:30)
And that’s where you come in. What markets are you operating in, John?

John A. Jacobsen (09:32)
Yes.

am in Southwest Florida, where it seems like everybody, and I mean everybody is coming to live and not just from New York. ⁓ Florida has grown, it’s been growing really since the 1930s. ⁓ But ⁓ after the COVID pandemic in 2020, we began to see a much increased migration into the state.

I live specifically in Naples, Florida, and that’s the very southwest, not quite at the bottom of the state, but probably about 75 miles to the north of that, if I had to guess. And we’re a beautiful area, a lot of real estate being transacted here.

Although agents have complained about it being a bit slower in the last few years. Man, we exploded in 2020, 2021. And it seemed that you could not find, there was very little you could find that was under seven figures anymore in South Florida. That’s the market I’m faced with.

across the state in the greater Miami area. It’s probably a little worse as they’re now talking about Miami becoming the new Los Angeles. I’m not sure I like that.

Scott Bursey (11:37)
completely understand. John, what caught my attention about you was the way you’ve been able to take your background as a jurist doctor and apply that surgical legal precision to the world of property claims, ensuring that homeowners aren’t just filing paperwork, but are actually winning the sediments that they deserve. That’s not easy, especially in this climate. Can you elaborate a little bit on that?

John A. Jacobsen (12:04)
Gladly, yes.

I got my law degree without any real indication of what I wanted to do with it. And this was a long time ago when I was in my late 20s. So this puts us in the late 1980s. I graduated in 1989 from law school in Minnesota, namely William Mitchell College of Law. And I

started in private practice for a couple years, but I really didn’t like the local suburban practice where you were either helping people get divorces or you were defending them when they went out and got drunk and got behind the wheel of a car. So I had clerked while I was in law school for a insurance defense firm, which was defending

It was defending their policyholders when say you get into a car accident in your house. And not in your house, but you get into a car accident and you injure somebody else and then they sue you. The insurance company automatically has a duty to defend you. And they assign an attorney’s and I worked for a firm that did that. So it exposed me to insurance issues pretty early and to understanding and interpreting policy language.

Well, then I got into claims adjusting about two years after law school was out and stayed with that because I was able to bring a very big something to the table with my attorney background in understanding policies and in helping people understand their policy. So did that and worked in

auto damage, namely bodily injury from automobile accidents, then got into employment litigation, general liability litigation, particularly against nursing homes, churches, and then that evolved into hospitals. When I started doing medical malpractice work for several years for an insurer of hospitals and doctors and was fascinated by that work.

⁓ But I’ve always wanted to take something obscure and not easy to understand and believe me, an insurance policy often qualifies as that. I still read these things and get a little bit jaded. ⁓ And my hat’s off, by the way, to real estate investors and owners who, especially if they’re in the business of title work and closings because

They’re reading stuff just as boring as insurance policies. But anyway, bringing back to bear to help people with claims and helping them in a process that in so many ways feeling more and more rigged against them is really my passion now in my career. And what I’m able to do, people come out.

Scott Bursey (14:49)
You

John A. Jacobsen (15:10)
of working with me and I’m seeing on average about 500 % return. They’ll come to me with a claim that the insurance company has offered only $10,000 and I’ve been able to turn it around into a $100,000 claim.

And, I’ve had claims that are denials that really the insurance company shouldn’t have been denied, but I was able to explain to the insured, hey, this is a covered loss and for these reasons. So let’s open it back up. We’ll do a new inspection. We’ll go to appraisal if we have to. And then we end up getting a settlement far, far more.

It’s been said that there’s at least when you hire a public adjuster, there’s at least about a 550 % return on investment. ⁓ That is, you end up doing that much better. Is it always that way? No. And sometimes it’s actually much better than that. ⁓ I’ve seen multi-million dollar claims made out of claims that started as maybe

three or 4 % of what the insurance company only offer about three or 4 % of what they eventually got. you can really only win when you know your policy or you work alongside someone who knows what they’re doing and can ⁓ can either drive your ship or help you drive it. Let’s just say

Scott Bursey (17:33)
completely understand what’s some of your goals that you have coming up next your objectives

John A. Jacobsen (17:44)
Right now, I’m helping policyholders throughout Florida, Georgia, the Carolinas. I’ve got a case going on in Connecticut. I’ve got one going on in Kentucky. And these involve homeowners.

and their homes. I’ve got one involving a hotel. I’ve got one involving a car wash. So, you know, I’m dealing with small and large commercial business and I’m also dealing with small and

large homes too. I’ve dealt with multi-multi-million dollar homes in Southwest Florida as well as across the state in the greater Miami area on claims quite often involving their roofs. But down here, ⁓ the water damage that happens inside a home after a hurricane is just, it’s really something else. But what

Scott Bursey (18:56)
Yes.

John A. Jacobsen (18:57)
Next for me right now is just continuing to do what I’ve enjoyed doing the most. And that is ⁓ helping homeowners, helping investors to understand what’s going on when they’re having a claim to understand this policy they’re paying good value for, and then making sense of it to the point that we get them a good

Scott Bursey (19:24)
And counselor, interested to know on that note, if you could expand on this, your passion, your drive, what keeps you going now that you’ve been successful? I mean, let’s face it, it’s easy to grind when you’re first starting out and you need the money, but what keeps you going now, counselor?

John A. Jacobsen (19:45)
Thanks for calling me counselor. I haven’t been called that in a long time. And I like the ring of that. You ever watch a show called the Lincoln Lawyer?

Scott Bursey (19:52)
I have not seen that one. No, no John.

John A. Jacobsen (19:54)
Yeah, this

is a lawyer who operates out of his old Lincoln Cut Nettle. And he’s got this law office going in a very successful practice. I kind of model myself after him to the extent that, I drive a Mustang, Mustang convertible, although I waited until I was like much older to get it. I’m 62.

now. But just killed some gray in your hair in this business. And anyway, ⁓ what I model myself after is someone like him getting out and helping people on everyday street with their claims and helping businesses because businesses also operate on everyday street. Although they might be on main street if you know what I mean, ⁓ but I’m

My passion is knowing that their lives ultimately were made better because I got involved. I think of how many people I’ve worked with who, and this is true of anybody going through a claim, their home is affected and oftentimes their livelihood is even affected.

And for them, it is their entire lives. For me, it’s another claim. It’s very easy when you’re busy and you’re handling hundreds of files. So thankfully I’m not that busy. Less is more, if you ask me. ⁓ Because then you’re able to really help those who need it the most and you’re able to devote the time to them and the money takes care of itself. But

That’s what keeps me getting up in the morning and going at it with my work is knowing that in a very traumatic time in people’s lives, I am able to help them and I’m able to give them the direction and the guidance to get to a place where they’re

recovering or their property is recovering, but ultimately they are too.

Scott Bursey (22:03)
Absolutely. And the one thing I’m really taking away from our conversation is your passion to truly help people. And John, that is so noble. It really is. Did you have anything else to add?

John A. Jacobsen (22:15)
Thinking about real estate investors and some of whom I’ve worked with plenty of times before, whether they’re owning commercial or landlords policies. My advice to them is don’t get just the bare minimum policy in

our business, say you’re a landlord over several properties, they’ll go out and they’ll get the most basic policy, I believe it’s called the DP-1. And that policy basically just covers fire. ⁓ It doesn’t cover a lot of other things such as that happen all the time, such as

you know, say a water heater leaks down into two units below and does substantial damage to their units. ⁓ You know, there’s other policies like the DP2 or DP3 that will ⁓ have a greater amount of coverage. And so I guess the first thing I urge investors to do is know what you’re buying and

make sure you’re getting adequate coverage, not just having the lowest deductible and the or sometimes they even want a high deductible but also and I think this is the trend especially with landlords and especially with larger commercial properties is require your

tenants to all carry their own renters policy if they’re renters or if you’re part of an association, if you’re part of a board and when you’ve got condos, they’ve all got to have by law an HO6 policy to cover their personal possessions and as the case is in Florida and some other states I’ve worked in, what we say this in in.

you know, any wall finishings, anything that goes inside from there, but then the bones of the property are the responsibility of the of the association policy. you get to get enough knowledge so that you can know what you’re talking about, especially when you go to your insurance agent and ask them for more. And listen, it’s wise.

to seek out a public adjuster like myself or find someone in your area ⁓ before you buy insurance to ask, based on what you’re seeing happening and claims out there, what would you recommend buying and what coverages should I have? So that’s as far as buying the policy itself. ⁓ I guess I should probably talk a couple minutes about

when you have a claim. first of all, agents really aren’t the best people to handle claims or the agent’s office. They can at least start it out for you and report it, but don’t rely on them to navigate through the process. You do that yourself and if you

need to have somebody in the background helping you. That’s where someone like myself comes in. But ⁓ the things I always tell policyholders about claims when I go out and speak is document your claim and all of your dealings with the insurance company very carefully. ⁓ Is it a pain to do? Yes, it is. But ⁓

Believe me later on, especially if you find out the insurance company’s been playing games with you, you’re going to be very glad that you document those things, that you documented all the things that happened all along. And the next thing is, is you compile data. You know, we’re in Florida, so, you know, we have many hurricanes down here.

We didn’t have one last year, which is making a lot of people in my business kind of jittery. anyway, when there’s a hurricane and I see a home, the windows have been damaged. And sometimes they might not even realize they’re damaged. I’ll hire someone who gets in and finds that there’s a vibration in the windows because with a hurricane, you’re going to have

winds upwards of 80 to I’ve seen as high as 120 miles an hour beating down on a house for hours on end. ⁓ But you arm yourself with data to the insurance company. In that case, there’s weather reports you can obtain. And there’s more sophisticated places to get them than on places online like Weather Underground. But you want to be able to

have as much data as possible. And that’s another thing I talked about windows a minute ago, you can look at windows like I’m looking at one right here, and not realize that the windows may be damaged. And that’s because there could be broken seals that don’t necessarily show or the window rattles for those hours for so long that they’re now loose.

And now heat is escaping, although heat escaping in Florida is not a bad thing, but heat is escaping or worse yet, cool air is escaping and we’ve got to have air conditioning on 12 months out of the year down here. you know, that being the case, that means your home is no longer the condition it was prior to the storm and an insurance policy is supposed to restore

your position back to where you were before the loss. insurance companies have to understand that and not just throw a dollar amount at you based just on something you see. But anyway, those are the main things I would impart to anybody is first of all, you arm yourself with

as much information or data as possible. secondly, I guess I just put these in reverse order, but you know, know your policy and know what your what is available to you and make sure that you go into every situation, amply covered. And then this is also where professionals like myself come in. And that is, you know, public adjusters

In a hurricane in Florida and many other states are following suit. They don’t allow us to charge more than 10 % of what we recover, and it’s usually based on a contingency and it’s at the end of the claim. Appraisal costs somewhat less than that. I talked about appraisal earlier and that’s a process built into a policy that maybe a lot of your listeners aren’t even aware of. Say, you know, you have a claim.

they only offer you $5,000, you have your contractor saying, you’ve got some serious damage here that they’re not paying you for, it’s going to cost at least $100,000. You go to the insurance company and you invoke your appraisal clause in your policy. If you’re not sure where that is, you contact someone like myself.

Maybe your agent will even know, but then we, you invoke the appraisal clause. You assign somebody to be an appraiser. I serve in that capacity. It has to do many public adjusters. Then the insurance company has to choose somebody. And it’s got to be someone who does not work for them. The two of us come together and we try to settle it. If we don’t, we bring in a third party. And this is where it sounds fun. We bring in an umpire.

Not to be confused with baseball, but we bring in an umpire who has to agree with one of us. And then that’s a binding award on the insurance company. A lot of state legislatures, I could spend hours talking about this, but a lot of state legislatures, including here in Florida, are trying to limit appraisal. We’ve had some insurance companies like one I used to do appraisal work for.

and I won’t mention names, but they actually took the appraisal clause and they only allow the insurance company to invoke appraisal, took it right out of their policyholders hand. But that forces them then if they’re not happy with what is in, what the insurance company is offering to either suck it up and deal with it or hire an attorney and attorneys are charging in many cases.

up to 30 and sometimes even 40 to 50 percent of their settlement. That’s a lot of money and it doesn’t leave you much behind. We’re usually able to build in public adjusters usually able to build in their fee and into the settlement and it all then works out. So I’ve rambled a long time. Anything else?

Scott Bursey (31:45)
Great advice.

great advice by somebody that knows what they’re talking about. Words of wisdom and that’s valuable. Thank you for sharing that.

Alright, before we wrap, if someone wanted to reach out, connect with you, and maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

John A. Jacobsen (32:04)
The best way to reach me would be via email. They can reach me through my website, which is johnajacobsen.net, that’s spelled with an E-N dot net. Or they can always call me. I’ve got an 800 number as well as mic.

the number they can reach me at here. I’m sure you’ll probably have something up to that effect, correct?

Scott Bursey (32:31)
Yes, perfect. Well, listen, I appreciate your time, John, your story and your advice.

John A. Jacobsen (32:32)
Okay.

Glad to offer it.

Scott Bursey (32:38)
We need more people in this space who truly care and are doing things the right way. Thanks again for being here.

John A. Jacobsen (32:44)
Thank you for having me, Scott.

Scott Bursey (32:46)
And for those of you tuning in, you got value from this, make sure that you’re subscribed. We have more conversations coming up with operators just like John, who are out there building real businesses. We’ll see you in the next episode, everybody.